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When asked what constitutes a fraud, many would think about the more obvious offences of false representation or even failure to disclose information when there is a legal duty to do so. However, the Fraud Act 2006 also introduces a third way in which an offence of fraud could be committed - fraud by abuse of position.

To establish fraud by abuse of position, the Defendant must occupy a position in which he was expected to safeguard, or not to act against, the financial interests of another person. The Defendant must then dishonestly abuse that position and intend to make a gain or cause a loss.

Examples of fraud by abuse of position include:

- an employee who fails to take up the chance of a crucial contract in order that an associate or rival company can take it up instead

- an accountant or bank employee who uses his trusted and privileged position to defraud his partners, colleagues or general public of money

- a director of a company who dishonestly makes use of knowledge gained as a director to make personal gain.

It is important to note that the offence is complete once the Defendant carries out the act which constitutes an abuse of his position. It is immaterial whether or not the Defendant is successful in his enterprise or whether any loss or gain was actually made.

For further information in respect of this matter, please do not hesitate to contact Michael May, Claire Wilson or Raymond Johnston.

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